CNBC News Releases

CNBC Exclusive: CNBC Transcript: Johnson & Johnson Chairman & CEO Alex Gorsky Speaks with CNBC’s Meg Tirrell on “Squawk Box” Today

WHEN: Today, Wednesday, May 20th

WHERE: CNBC's "Squawk Box"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Johnson & Johnson Chairman & CEO Alex Gorsky on CNBC's "Squawk Box" (M-F, 6AM-9AM ET) today. Following are links to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000381199, http://video.cnbc.com/gallery/?video=3000381170 and http://video.cnbc.com/gallery/?video=3000381210.

All references must be sourced to CNBC.

JOE KERNEN: JOHNSON & JOHNSON, WE'VE BEEN TALKING ABOUT THIS INTERVIEW, HOLDING A PHARMACEUTICAL ANALYST MEETING TODAY. MEG TERRELL IS THERE AND SHE IS NOW JOINING US WITH A VERY SPECIAL GUEST. MEG.

MEG TIRRELL: JOE, THANK YOU SO MUCH. JOINING US NOW IS CEO ALEX GORSKY. THANK YOU FOR JOINING US.

ALEX GORSKY: MEG, GREAT TO HAVE YOU HERE IN NEW BRUNSWICK. AS YOU KNOW, THIS IS THE HOME OF JOHNSON & JOHNSON. AND WHO WOULD HAVE THOUGHT 125 YEARS PLUS AGO WHEN THE JOHNSON BROTHERS STARTED J & J THAT WE'D BE TALKING ABOUT THE KIND OF INNOVATIONTHAT WE'RE GOING TO BE REVIEWING TODAY WITH THE ANALYSTS AND WITH YOU.

TIRRELL: AND JUST PUTTING OUT NEWS THIS MORNING, YOU'RE PLANNING ON FILING FOR APPROVAL OF TEN NEW DRUGS JUST IN THE NEXT FOUR YEARS, EACH WITH THE POTENTIAL TO BRING IN MORE THAN A BILLION DOLLARS. DOES THAT ASSUME BASICALLY EVERYTHING IN YOUR LATE-STAGE PIPELINE IS A SUCCESS?

GORSKY: LOOK, WE'RE REALLY EXCITED ABOUT THE INNOVATION THAT WE'RE GOING TO BE ABLE TO TALK TO TODAY. AS YOU SAID, IF YOU GO BACK SINCE 2009 WE'VE ACTUALLY LAUNCHED 14 COMPOUNDS. NOW IF WE LOOK FORWARD BETWEEN NOW AND 2019, YES, WE EXPECT TO HAVE ABOUT TEN COMPOUNDS. NOW OF COURSE YOU'RE GOING TO HAVE SOME WINS, YOU'RE GOING TO HAVE SOME THAT DON'T TURN OUT QUITE THE WAY YOU EXPECT, BUT OVERALL WE'RE VERY CONFIDENT IN THE ABILITY, PARTICULARLY BASED ON WHAT WE'VE BEEN ABLE TO DO OVER THE PAST SEVERAL YEARS, ON OUR ABILITY TO REALLY IMPACT PATIENTS AND DRIVE THIS KIND OF INNOVATION GOING FORWARD.

TIRRELL: SOME OF THE OTHER NEWS YOU PUT OUT THIS MORNING IS ON YOUR MULTIPLE MYELOMA DRUG, DARATUMUMAB, SAYING YOU'RE GOING TO FILE FOR APPROVAL JUST BASED ON MIDSTAGE DATA THAT YOU HAVEN'T EVEN PRESENTED YET. YOU WILL PRESENT IT AT ASCO. SO WHAT DOES THAT SAY ABOUT HOW GOOD THOSE DATA LOOK IN JUST A COUPLE OF WEEKS?

GORSKY: WELL, I HAVE TO SAY, I'M SO PROUD OF OUR ONCOLOGY TEAM. IF YOU LOOK OVER THE LAST FOUR OR FIVE YEARS, THE COMPOUNDS THAT WE'VE BEEN ABLE TO LAUNCH, WHETHER IT IS ZYTIGA OR IBRUTINIB, AND NOW THE PHASE TWO DATA ON DARATUMUMAB, I'M SURE THAT YOU PROBABLY KNOW PEOPLE WHO HAVE BEEN AFFECTED BY MULTIPLE MYELOMA. I KNOW I HAVE HAD FRIENDS AND COLLEAGUES WHO HAVE BEEN AFFECTED AND EVEN DIED FROM IT. AND TO THINK WE COULD HAVE THIS KIND OF DATA WITH THIS KIND OF RESULTS, EVEN IN PATIENTS WHO HAVE TRIED PREVIOUS THERAPIES, IT'S REALLY PROMISING. I THINK IN JUST ONE INDICATION OF THE PAYOFF THE PATIENTS ARE GETTING, THAT WE'RE GETTING FROM THE INVESTMENTS THAT WE MADE IN THE ONCOLOGY AREA AND OTHER INNOVATIONS OVER THE PAST SEVERAL YEARS.

TIRRELL: NOW A LOT OF GROWTH COMING, YOU'RE LAYING OUT TODAY. BUT WHAT ANALYSTS I THINK ARE REALLY FOCUSED ON AS A NEAR TERM CHALLENGE IS A POTENTIAL COMPETITOR TO REMICADE, YOUR BIG RHEUMATOID ARTHRITIS DRUG. WHEN DO YOU EXPECT THAT BIOSIMILAR TO HIT THE MARKET?

GORSKY: WELL, YOU KNOW, WHAT WE'RE REALLY TALKING ABOUT HERE TODAY IS ALL THE INNOVATION THAT WE HAVE COMING FORWARD. BUT WE DO UNDERSTAND BIOSIMILARS ARE PART OF THE MARKETPLACE IN WHICH WE COMPETE. WHAT WE THINK IS FIRST OF ALL, IT'S REALLY IMPORTANT THAT WE FOCUS ON THE PATIENTS AND ALL THESE AREAS. WE LAUNCHED THE FIRST MONOCLONAL ANTIBODY MORE THAN TEN YEARS AGO. WHEN YOU LOOK AT BIOSIMILARS OR GENERICS, KEEPING THE PATIENT FIRST WHEN WE CONSIDER INDICATIONS, SAFETY, EFFICACY IS THE NUMBER ONE PRIORITY. SECOND, OF COURSE WE'RE GOING TO MAKE SURE WE PROTECT OUR INTELLECTUAL PROPERTY RIGHTS. THAT'S SO IMPORTANT TO OUR INDUSTRY. THAT'S WHAT GIVES US THE ABILITY FRANKLY TO INVEST IN THE INNOVATION FOR THE FUTURE. BUT WE DO FEEL THERE'S A PLACE FOR GENERICS AND BIOSIMILARS AS LONG AS THEY HAVE GONE THROUGH THE APPROPRIATE PROCESS. THIRD, IF YOU LOOK AT OUR ENTIRE IMMUNOLOGY PORTFOLIO, THINGS LIKE SIMPONI AND STELLARA THAT ARE ALREADY ON THE MARKET DOING VERY WELL. YOU'RE GOING TO HEAR ABOUT GUSELKUMAB AND SIRUKUMAB HERE, AISLE 6, AISLE 23, NEW APPROACHES, WE THINK WE'VE GOT A COMPREHENSIVE APPROACH TO THE WAY WE'LL GO ABOUT DEFENDING OUR FRANCHISE AND FRANKLY HELPING EVEN MORE PATIENTS IN IMMUNOLOGY.

TIRRELL: JOE, DO YOU WANT TO ASK A QUESTION?

KERNEN: HI, ALEX. I KNOW THIS IS MOSTLY ABOUT YOUR PHARMACEUTICAL DIVISION TODAY, BUT I LOOK BACK ON THE LAST FIVE, TEN YEARS AT J & J AND IT SEEMED LIKE BILL WELDON SPENT A LOT OF HIS TIME PUTTING OUT FIRES. QUALITY ISSUES WHICH PREVENTED HIM OF MAYBE MAKING MORE TRANSFORMATIVE MOVES THAT I WONDER IF YOU'RE CONSIDERING. SINCE THIS IS THE FASTEST GROWING PART, DOES THE CONSUMER PRODUCTS DIVISION AND MEDICAL DEVICES, DOES IT STILL MAKE SENSE TO KEEP ALL THOSE UNDER ONE UMBRELLA? DO INVESTMENT BANKERS COME TO YOU AND SAY YOU COULD DO THIS IF YOU DID THIS OR IF YOU FOCUS ON THIS, YOU COULD GET, YOU KNOW, SHAREHOLDER VALUE WOULD GO UP. ARE THERE ANY THINGS LIKE THAT THAT YOU THINK ABOUT FROM TIME TO TIME?

GORSKY: WELL, THANKS A LOT FOR THE QUESTION, JOE. HEY, MAYBE NEXT TIME YOU CAN BE OUT HERE TO JOIN US FOR THIS MEETING AS WELL. BUT WHETHER IT WAS BILL WELDON OR RALPH LARSEN, I THINK IF YOU GO BACK IN THE HISTORY OF JOHNSON & JOHNSON, ONE THING WE'VE BEEN COMMITTED TO IS MANAGING OUR BUSINESS AS A DIVERSIFIED PORTFOLIO. YOU KNOW, WE REALLY THINK THAT HAVING THAT ABILITY – FRANKLY THAT GAVE US THE ABILITY SEVERAL YEARS AGO TO REINVEST IN OUR PHARMACEUTICAL PIPELINE WHEN WE EXPERIENCED ABOUT AN $8.5 BILLION GENERIC LAUNCH AND PATENT EXPIRERY. BUT WE CONTINUE TO INVEST MORE THAN 20% OF OUR SALES OVERALL BECAUSE OF A STRONG MEDICAL DEVICE BUSINESS, A STRONG CONSUMER BUSINESS. AND WE'VE SEEN THE BENEFIT OF THAT IN OUR PHARMACEUTICAL PIPELINE OVER THE PAST FIVE YEARS WITH ALL THE LAUNCHES AND ALL THE GREAT INNOVATIONS THAT WE'RE GOING TO TALK ABOUT TODAY. SO WE THINK FINANCIALLY IT GIVES US INCREDIBLE FLEXIBILITY AND CAPABILITY. THE OTHER EXCITING THING FOR US THOUGH, IS ALSO ABOUT THE SCIENTIFIC OPPORTUNITIES. AS WE THINK ABOUT AREAS GOING FORWARD, WHETHER IT'S ONCOLOGY, WHETHER IT'S THINGS IN THE BACK OF THE EYE, BEING ABLE TO COMBINE DEVICES AND PHARMACEUTICAL PRODUCTS AND EVEN CONSUMER APPROACHES AND PERHAPS WELLNESS PROGRAMS IN NEW AND INNOVATIVE WAYS, WE THINK IS PARTICULARLY EXCITING. AND FINALLY IT'S REALLY IMPORTANT FOR OUR COLLEAGUES HERE, GIVING THEM DIFFERENT CAREER PATHS, DIFFERENT OPPORTUNITIES TO DEVELOP THEIR TALENT HAS ALSO BEEN A REAL BENEFIT OF HAVING THIS DIVERSE PORTFOLIO. WHILE OF COURSE FROM TIME TO TIME PEOPLE ARE GOING TO CHALLENGE YOU, SAYING YOU SHOULD BE A PURE PLAY HERE OR PURE PLAY THERE, WE THINK THIS APPROACH IN THE LONG TERM IS IN THE BEST INTERESTS OF PATIENTS AND FRANKLY ALL OF OUR STAKEHOLDERS.

KERNEN: YOU KNOW ALEX, JUST REAL QUICKLY, ONE OTHER THING THAT I THINK ABOUT A LOT, I KNOW IAN READ AND I KNOW THE MAN AND I UNDERSTOOD HIS RATIONALE WITH PFIZER BECAUSE HE MADE IT VERY CLEAR TO ME THAT HE COULD INVEST A BILLION DOLLARS MORE WITH A LOWER TAX RATE INTO R&D IF THE TAX RATE IN THE UNITED STATES WAS MORE COMPETITIVE WITH THE REST OF THE WORLD. SO IT WAS SIMPLE FOR HIM TO TRY TO CHANGE WHERE PFIZER WOULD BE DOMICILED. AT THIS POINT, IN TERMS OF THE TAX RATE, DO YOU SEE OTHER COMPANIES ABLE TO OUTBID YOU ON ATTRACTIVE ACQUISITIONS, OTHER FOREIGN COMPANIES, BECAUSE OF THE INEQUITABLE TAX STRUCTURE GLOBALLY? IS THAT SOMETHING THAT BOTHERS YOU OR YOU'D PUSH TO HAVE CHANGED?

GORSKY: WE'VE BEEN WORKING WITH THE GOVERNMENT AND OF COURSE WOULD LIKE TO SEE A MORE COMPREHENSIVE TAX REFORM PACKAGE DONE IN THE UNITED STATES. WE THINK THAT WOULD BE GOOD FOR ALL COMPANIES TO HELP US BE EVEN MORE COMPETITIVE. BUT WE ALSO BELIEVE THAT TAX IS ONLY ONE COMPONENT OF YOUR OVERALL M&A STRATEGY. MAKING SURE YOU UNDERSTAND THE SCIENCE, MAKING SURE WE UNDERSTAND THE OVERALL MARKETPLACE, PUTTING ALL THOSE THINGS IN THE BALANCE, WE THINK THAT'S WHAT HELPS US REMAIN VERY COMPETITIVE. WE THINK WE'VE HAD ACTUALLY A VERY GOOD BALANCE. IF YOU LOOK OVER THE LAST 20 YEARS, FOR EXAMPLE, WITH JOHNSON & JOHNSON, WE'VE INVESTED OVER $200 BILLION, ABOUT HALF OF THAT IN INTERNAL R&D, HALF OF THAT IN M&A, SO WE THINK HAVING A BALANCED APPROACH IS REALLY WHAT ENABLES US TO HAVE LONG-TERM SUCCESS.

TIRRELL: I WANT TO ASK YOU ABOUT YOUR M&A STRATEGY AND BUSINESS DEVELOPMENT BECAUSE JUST YESTERDAY YOU ANNOUNCED A DEAL WITH ACHILLION IN HEPATITIS C, YOU WERE SAID TO BE A POTENTIAL BIDDER FOR PHARMACYCLICS, WHICH WAS A $21 BILLION DEAL ULTIMATELY. SO WHERE ARE YOU LOOKING AT M&A? HOW MUCH ARE YOU WILLING TO SPEND? WOULD YOU DO A BIGGER DEAL?

GORSKY: LOOK, WE THINK IT'S VERY IMPORTANT TO ULTIMATELY GO AFTER THE BEST SCIENCE. WE'RE REALLY AGNOSTIC ABOUT WHETHER IT'S INTERNAL OR EXTERNAL. BUT IF WE GET THE BEST SCIENCE, WE ULTIMATELY KNOW WE'RE GOING TO HELP MORE PATIENTS AND WE'RE GOING TO CREATE THE BEST BUSINESS OPPORTUNITIES. WE'RE ALWAYS ON THE HUNT FOR NEW SCIENTIFIC PLATFORMS. SO WHETHER IT'S IN AREAS SUCH AS ONCOLOGY, WHETHER IT'S IN VIRALOLOGY, WHETHER IT'S IN NEUROSCIENCE, WE THINK MAKING SURE WE'RE ALWAYS ON THE HUNT, SO TO SPEAK, LOOKING FOR THOSE NEW OPPORTUNITIES. SOMETIMES IT'S COMPLEMENTARY TECHNOLOGY. SO IF YOU THINK ABOUT WHAT WE JUST ANNOUNCED THIS MORNING, WE ALREADY WERE ABLE TO INTRODUCE – LAST YEAR. WE WENT OUT AND WE ALSO DID THE ALIOS ACQUISITION, WHICH WE ARE REALLY EXCITED ABOUT IN RVS. BUT WHEN WE DO THOSE ACQUISITIONS, THE OTHER THING THAT WE ACQUIRE BEYOND MOLECULES, ARE GREAT SCIENTISTS. PEOPLE LIKE LARRY BLATT WHO ALSO IS GOING TO BE WORKING NOW, TAKING PERHAPS OUR PROTEASE INHIBITOR THINKING ABOUT HOW DO WE COMBINE IT WITH AN NS5A FROM ACHILLION, HOW DO WE THEN PERHAPS COMBINE THAT WITH OTHER NUKES TO REALLY COME UP WITH A GREAT – APPROACH IN HEPATITIS C THAT'S GOING TO BE GREAT FOR PATIENTS AND GREAT FOR OUR BUSINESS.

TIRRELL: OH MY GOSH. SO MANY MORE QUESTIONS FOR YOU, UNFORTUNATELY WE HAVE TO LEAVE IT THERE. ALEX GORSKY, THANK YOU FOR JOINING US.

GORSKY: MEG, THANK YOU SO MUCH. IT WAS A PLEASURE BEING HERE THIS MORNING.

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